Question
On 1/1/ 20 , Gimmel Corp issued $400,000 face value, 8%, 10 year bonds. The effective interest rate on that date was 6%. Interest payment
On 1/1/20, Gimmel Corp issued $400,000 face value, 8%, 10 yearbonds. The effective interest rate on that date was 6%. Interest payment dates are 6/30 and 12/31 of each year. On 4/30/21, the bonds were retired at 110 plus accrued interest. Gimmel uses the effective interest method.
INSTRUCTIONS
A) Determine the issue price of the bonds and prepare a journal entry for their issuance on 1/1/20.
B) Prepare journal entries for payment of interest and for amortization on 6/30/20 and 12/31/20.
C) Prepare journal entries for the retirement of the bonds on 4/30/21.
On 1/1/20, Gimmel Corp issued $400,000 face value, 8%, 10 yearbonds. The effective interest rate on that date was 6%. Interest payment dates are 6/30 and 12/31 of each year. On 4/30/21, the bonds were retired at 110 plus accrued interest. Gimmel uses the effective interest method.
INSTRUCTIONS
A) Determine the issue price of the bonds and prepare a journal entry for their issuance on 1/1/20.
B) Prepare journal entries for payment of interest and for amortization on 6/30/20 and 12/31/20.
C) Prepare journal entries for the retirement of the bonds on 4/30/21.
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